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Aussie: The day’s loser

Market Analysis

AUDUSD, Daily

The Australian dollar is the day’s loser, presently off its lows by still showing a net 0.3% decline to the U.S. buck and a 0.4% loss versus both the yen and the New Zealand dollar. The Australian government issued a report today prognosticating that iron ore prices are set to tumble 20% this year on the back of rising global supply and falling Chinese demand. Iron ore is one of Australia’s key exports, so the projection took a toll on the Aussie, which, after four consecutive weeks of gains versus the U.S. dollar, had been looking ripe for a correction. There have also be reports of specific AUDNZD selling throughout the day, which has driven the cross to three-week lows.

AUDUSD logged a two-session low at 0.7826 during the London AM session, and has since remained heavy. The pair needs to close below Friday’s closing level, to affirm a picture of weakening upside momentum, but further more, below the 0.7813, which is the 50% Fibonacci level, set since September 8. Hence strong resistance comes at 61.8% Fibonacci level at 0.7885.  Next domestic focus will be the release of November building approvals on Tuesday, which we expect will dip 0.5% after the 0.9% gain in October. The next RBA meeting is on February 6, where the cash rate expected to remain at 1.5%.

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Andria Pichidi

Market Analyst

HotForex

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